2015 (9) TMI 1006 - AT - Income Tax

Validity of assessment under Section 153A/153C - Held that - In the present case, the assessment pertaining to Assessment Years 2003-04 to 2007-08 had not been abated. This fact is not disputed by the Revenue. Therefore, in these years, the assessment ought to have been made on the basis of incriminating material as per the decision of the Hon ble Special Bench in the case of All Cargo Global Logistics Ltd. vs. Dy. CIT, Central Circle-44 (2012 (7) TMI 222 - ITAT MUMBAI(SB)). The Revenue has not pointed out what was the incriminating material available on the basis of which the impugned assessment orders had been framed. In the absence of such material, we cannot sustain the impugned assessment in view of the binding precedent as relied upon by the assessee. Therefore, we hereby quash the assessment orders pertaining to AYs 2003-04 to 2007-08 as challenged before us in this bunch of appeals. - Decided in favour of assessee.

Issues Involved:
1. Validity of invoking Section 153A.
2. Legality of the assessment orders under Section 153A.
3. Disallowance of personal expenses.
4. Disallowance of agricultural expenses.
5. Interest under Sections 234B and 234D.

Detailed Analysis:

1. Validity of Invoking Section 153A:
The appellant contended that the CIT(A) erred in upholding the validity of the assessment orders under Section 153A, arguing that no incriminating material was found during the search. The appellant cited the decision of the Hon'ble ITAT Mumbai Bench (Special Bench) in All Cargo Global Logistics Ltd. vs. Dy. CIT and the affirmation by the Hon'ble Bombay High Court in CIT vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. The CIT-DR countered that Section 153A does not require the assessment to be based solely on incriminating material found during the search.

2. Legality of the Assessment Orders under Section 153A:
The Tribunal examined the provisions of Section 153A and noted that the assessments for AYs 2003-04 to 2007-08 had not abated, meaning they should have been based on incriminating material. The Tribunal found that the Revenue did not point out any incriminating material on which the assessments were based. Citing the binding precedent from the Special Bench decision in All Cargo Global Logistics Ltd., the Tribunal quashed the assessment orders for AYs 2003-04 to 2007-08, as no incriminating material was found.

3. Disallowance of Personal Expenses:
The AO disallowed Rs. 62,622/- claimed as business expenses (depreciation on car, insurance, and petrol expenses) on the grounds that the assessee could not justify these as business expenses. The disallowance was made under Section 37(1) of the Income Tax Act, treating them as personal expenses.

4. Disallowance of Agricultural Expenses:
The AO added Rs. 2,23,861/- to the total income, estimating that the assessee incurred additional agricultural expenses from undisclosed income. The assessee had shown gross agricultural income of Rs. 11,19,304/- and claimed expenses of Rs. 50,000/-. The AO estimated expenses at 20% of the agricultural income, leading to the additional disallowance.

5. Interest under Sections 234B and 234D:
The appellant contended that the CIT(A) erred in upholding the interest charged under Sections 234B and 234D. However, this issue was not adjudicated as the assessment was quashed on the issue of legality.

Conclusion:
The Tribunal quashed the assessment orders for AYs 2003-04 to 2007-08 due to the absence of incriminating material, following the precedent set by the Special Bench decision in All Cargo Global Logistics Ltd. Consequently, the other grounds raised by the assessee were not adjudicated. All five appeals of the assessee were allowed.

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